Alvotech Expects Minimal Impact From U.S. Tariffs On Imported Pharmaceuticals Due To Customer Agreements

Alvotech, a global biotech company focused on biosimilars, has announced that the proposed U.S. tariffs on imported pharmaceuticals are expected to have minimal financial impact on its operations in 2025. The company manufactures its products in Iceland, which would face a 10% tariff under the new measures, currently the lowest rate being considered.

Alvotech estimates that such a tariff would increase the cost of its products imported into the U.S. by less than 1% of its projected 2025 product revenue. This limited impact is due in part to the company's current pricing structure and supply chain efficiencies, which absorb minor cost changes without significantly affecting margins.

Robert Wessman, chairman and CEO of Alvotech, said in a statement, “With the lingering uncertainty in the market about tariffs, and companies planning accordingly, I feel that it is important to communicate clearly about this issue. We manufacture all our biosimilars in Iceland, a country which imports more goods from the U.S. than it exports to the U.S., and is therefore only subject to the minimum 10% tariff introduced in April. Because a favorable U.S. trade balance is one of the key objectives of the new tariff policy, we have currently no reason to believe that a much higher tariff would be applied to pharmaceuticals from Iceland than on other goods. 

He continued, “I expect that policymakers will also take into account that biosimilars offer the most cost-effective means of increasing patient access and lowering the cost of vital biologics for U.S. patients. The estimated impact of a 10% tariff on our sales to the U.S. in the second half of the year would be less than 1% of our expected product revenues in 2025, and these costs would not be paid by Alvotech. Looking beyond 2025, given anticipated product launches and increased sales, we estimate that the impact would still constitute a low single digit percentage of Alvotech’s anticipated total product revenues.”

Importantly, Alvotech emphasized that under existing commercial agreements, its customers are responsible for all transportation and import-related costs. As a result, any additional expenses arising from the tariffs would not be paid by the company, further safeguarding its financial outlook.